The sharing economy

When Keith Schmitz’ doctor told him to go to the hospital a few weeks ago for an analysis of a potential heart problem, it was already 7 p.m. on a weeknight.

The 66-year-old Shorewood resident had his wife drop him off at Columbia St. Mary’s, and then told her to head home.

“Because the appointment was going to go into the night, I said, ‘Don’t worry about it,’ and I took an Uber home,” Schmitz said. “She has to go in to work the next morning and I didn’t want to have her wait up for me. It wrapped up about 11 o’clock and since (CSM is at) the corner of North and Prospect, the area was just swarming with Uber cars.”

Schmitz, owner of public relations firm KRPR Inc., found out about ridesharing service Uber while he was visiting his daughter in San Francisco. She works at Facebook and is familiar with the startup.

“They didn’t want to take my wife and I to the airport at 6 in the morning – actually, it would have been 4 in the morning,” he said.

So he used Uber to get to the airport and it went smoothly. Now that he’s back in Milwaukee, Schmitz said he would use the rideshare service again to get somewhere it’s not convenient to drive or park.

For Milwaukee, sharing a bike, or a car or a home, is a recent phenomenon. Right around the time bikesharing service Bublr was launched in August 2014 (see companion story), Uber came on the scene in Milwaukee, followed quickly by competitor Lyft. Homesharing service Airbnb also has started to gain a foothold in the Cream City.

When Uber launched its model of hailing a ride, it turned the traditional taxicab industry on its head.

Rather than having riders call for a pickup or hail a cab on the street, Uber and Lyft offer riders the ability to enter the pickup and dropoff location, request a pickup, track the car’s progress toward the pickup location, rate the driver and make payment, all via a mobile app.

When Uber launched in Milwaukee it had an immediate impact on taxicab ridership, said Andrea Davis, whose family owns American United Taxi Co.

“When Uber comes out into a city, they like to do a bunch of promotions to get a whole bunch of riders,” Davis said. “They were offering rides for cheap, way cheaper than our drivers could offer.”

American United and Yellow Cab, Milwaukee’s other cab service, lobbied the City of Milwaukee to prevent Uber from operating without taxicab permits. They argued ridesharing skirted licensing and insurance regulations for commercial driver services.

“When Uber came to Milwaukee and they took the rides from us, the taxicab drivers, the taxicab industry did try to fight it, but Uber kept winning,” Davis said. “We said, ‘You know what, instead of trying to fight it, why don’t we start to compete with them instead?’”

When Uber started promoting its Milwaukee launch, Davis was already forming a startup, BidRide, which offers a mobile app riders can use to request a ride from taxi drivers.

“We’ve been to Yellow and we’ve told their drivers that they should sign up for BidRide as well, just because we want to help the taxicab industry,” she said.

BidRide, which allows drivers to bid a flat fee prior to a ride, seizes on one common complaint among rideshare users: Surge pricing. Particularly on weekend nights, Uber and Lyft riders are hit with higher ride prices during peak demand.

The startup now has about 100 drivers and 150 users, Davis said.

In a way, it was good that Uber and Lyft came along, since the taxi industry had not changed in decades and may have needed some disruption to drive innovations like BidRide, she said.

“The taxicab industry, it really hadn’t changed in 60 years and it probably would have kept going as it was going,” Davis said.

Milwaukee was the first Wisconsin city to be introduced to Uber, but the company has expanded its service since it launched in early 2014. Uber’s Wisconsin coverage area now includes the Milwaukee, Madison, Lake Geneva, Wisconsin Dells, Janesville, Kenosha, Racine and Green Bay areas.

“We partner with drivers living in all the cities we operate, but we have also seen drivers who live in Milwaukee occasionally drive in those other areas of the state either to make some extra money on a busy weekend (i.e., a Packers home game in Green Bay) or to accept trips somewhere they were already planning to go (i.e., visiting family in Kenosha and driving during their stay),” said Dave Bauer, a spokesperson for Uber.

Uber has facilitated more than 3 million rides since its Milwaukee launch, with an average of 200,000 trips taken each month. In July, more than 90,000 riders were transported via Uber in Milwaukee, the company said.

The company has about 3,000 Milwaukee-area drivers who work varying hours to fit their schedules.

Uber also indicated some of its riders use the service as a first mile or last mile solution to access public transit in Milwaukee.

Both Uber and Lyft are in hundreds of cities across the country. Both companies subject drivers to criminal and driving history background checks, and they must meet minimum vehicle requirements.

Lyft, which launched in Milwaukee in April 2014, declined to provide numbers on its drivers and riders.

“We don’t have local specifics since we started in the market, but in the past year we’ve more than doubled rides,” said Mary Caroline Pruitt, a spokesperson for Lyft. “We’ve actually tripled our driver base in Milwaukee in the past year.”

The company enters a new market when it receives interest and requests from residents, she said.

And having another transportation option could potentially be life-saving. In cities with Lyft, 84 percent of drivers are more likely to avoid driving while impaired, she said.

Sharing is caring

The philosophy of many sharing economy services is strangers helping each other out and giving each other a leg up or a sympathetic ear.

Tom Wiedmeyer, owner of Hartford television commercial producer TPW Productions, knows this concept well. He drives for Lyft in his free time – not for the extra income, but to meet new people.

Wiedmeyer, 46, is better known in the ridesharing community as “Glowstick Tom” or “the disco Lyft.” He has glowstick bracelets, disco lights, music videos, starburst candy and water bottles for passengers.

“We invite you to sit in the front seat, we have a conversation with you, and you’re basically a friend I haven’t met yet, but you’re a friend now,” Wiedmeyer said.

The Hartford resident filled out an application to drive for Lyft before it got to Milwaukee and was one of the area’s first drivers, hired in February 2014. He mostly works weekend nights, when rides are most in demand, setting his hours as his schedule allows.

The age of his riders varies, but they’re always more technologically savvy folks. He’s busiest during festivals like Pridefest and Brady Street Days and on holidays like Halloween.

“I drive Lyft because I love the people I pick up. I love the stories I hear,” Wiedmeyer said. “I have a lot of deep conversations with people.”

He also puts on music videos for singalongs when the time is right.

“Taxis kind of ruled the roost for a while and there was no competition,” Wiedmeyer said. “A lot of the taxi drivers that would drive around Milwaukee I don’t think provided the great customer service that Lyft and our competitor do.”

Opening your home to strangers

Airbnb has a philosophy similar to Uber’s and Lyft’s, allowing residents to rent their homes to travelers looking for a place to stay, usually at a lower rate than area hotels.

But it can also be a cash cow for homeowners renting out their properties.

In November 2014, Dan Wilde, 38, and his wife, Sherry, 39, were looking for a new tenant for the other half of the duplex they owned at North 61st Street and West Wright Street in Milwaukee’s Uptown neighborhood.

But the weather had turned cold and the holidays were approaching, so they didn’t think they would find one.

A friend who traveled frequently suggested Airbnb, and the couple, who were already renting out another duplex property to traditional tenants, decided to give it a try.

They decorated it with photos of Milwaukee icons like the art museum and Harley-Davidson motorcycles, and even got a kegerator to fill with Lakefront Brewery’s Riverwest Stein for guests. The Wildes put out a welcome book for guests with activity and restaurant recommendations, as well as background on Milwaukee and their home. One of them meets each guest upon arrival to show him or her around, and they’re available by text to answer any questions.

“We try to provide that culture, when you walk into the place you get the feel of the city without having to leave and go do things,” Dan said. “It’s the alternative to a hotel where you get a much richer and more fulfilling experience than kind of the standard stay at a hotel.”

Fast forward a couple years and the pair has moved out of the other half of the duplex into a single family home in nearby Wauwatosa. Both units of the duplex are rented out all the time to travelers in town for weddings, funerals, on a weekend getaway from Chicago, visiting new grandchildren and working three-month medical rotations in the area. They’ve had guests from as far away as Norway and South Korea.

“On average in the summer, there’s very few days open per month,” Dan said. “From May through the end of August, it’s rare that there’s more than five or six days open per month.”

The Wildes rent their units out for between $99 and $125 per night. They make an average of $2,000 per unit each month, but in the summer that jumps to $6,000. If they were renting it out to a traditional tenant, the Wildes would make about $1,900 per unit per month throughout the year.

“It pays for the mortgage on the Airbnb and our mortgage on our house,” Dan said.

But there are expenses. The Wildes now have two cleaning people to turn the units over after guests leave, and they got a membership to Costco to replenish supplies.

“Airbnb and the guests that we get, they’re probably screened better than you would screen for a tenant anyway,” Dan said. “With Airbnb, you get to read reviews from other hosts on those guests.”

The effect of Airbnb rentals on hotels in the Milwaukee market is so far unclear. But the service is growing quickly here.

The company has 200 hosts in the Milwaukee market, and about 13,500 people stayed in Milwaukee via Airbnb in the 12 months ending June 30, according to Benjamin Breit, Airbnb spokesman. The number of visitors using Airbnb in Milwaukee is up 133 percent year-over year.

The typical Milwaukee Airbnb host rents out a room or home 56 days per year and makes about $5,000 annually, Breit said.

Cities like Chicago and New York, with higher population densities and more robust tourism, have larger user bases. In the year ended June 30, Chicago had 5,000 Airbnb hosts accepting 315,400 guests.

But Indianapolis, closer in size to Milwaukee, could provide a peek into the future. It had 1,000 hosts and 20,400 guests using Airbnb in the year ended June 30, up 231 percent from last year.

“I don’t see it as a major impact,” said Greg Hanis, president of Hospitality Marketers International Inc., which has a New Berlin office. “Airbnb has had a more significant impact in markets like New York. New York, Miami, Chicago, to some extent has seen some impact from Airbnb. I don’t see it as being an overall long-term impact to hotel stays.”

At the same time, some of those larger cities are starting to discuss imposing regulations on the service, Hanis said.

The hotel industry says Airbnb is violating the law by renting out rooms for commercial purposes and not paying city, county and room taxes on them. The units also are likely not licensed or inspected by the health department or in proper zoning, said Trisha Pugal, president and chief executive officer of the Wisconsin Hotel and Lodging Association.

“Frequently, they have homeowners insurance and not business/property,” Pugal said. “A homeowners policy would not cover someone renting out a property for money.”

“I think the Airbnb community is all waiting for (more regulation) to happen,” Dan Wilde said. “I completely understand that it’s really kind of unfair how we don’t treat it as a hotel or we’re not taxed like a hotel.”

Pugal said Airbnb has a broad impact on not only municipalities and hotels, but neighbors who may not appreciate the noise and constant rotation of overnight guests.

“I think, in general, it’s actually the smaller properties that are impacted the most,” she said. “The bed and breakfasts, the motels, the smaller inns. It also can have an impact on meeting business. Room blocks for conventions.”

The WHLA is working on educational materials for people considering becoming Airbnb hosts, Pugal said.

“A lot of people just hear that perhaps it’s an easy way to make money and they don’t realize what they should be doing and their own personal property could be vulnerable if they don’t take certain steps to protect themselves,” she said.

But Hanis says several hundred more units of Airbnb would need to be added in the Milwaukee market to have a measurable impact on hotels.

The concept makes sense. It can be fun for a traveler to stay somewhere different and a consumer is likely to choose a less expensive option if it’s available, but Airbnb doesn’t have some of the amenities of hotels, such as restaurants for business meetings, Hanis said.

“There’s a different clientele that goes to (Airbnb), maybe more of a millennial-type market might like them, but the traditional hotel is still the basis for where people stay when they travel,” he said.